chapter 11 mis

Management Information SystemsManagement Information SystemsMANAGING THE DIGITAL FIRM, 12TH EDITION

MANAGING GLOBAL SYSTEMS

Chapter 11

Management Information SystemsManagement Information Systems

• What major factors are driving the internationalization of business?

• What are the alternative strategies for developing global businesses?

• How can information systems support different global business strategies?

• What are the challenges posed by global information systems and management solutions for these challenges?

• What are the issues and technical alternatives to be considered when developing international information systems?

Learning Objectives

CHAPTER 11: MANAGING GLOBAL SYSTEMS

© Prentice Hall 20112


• Problem: 3M’s many divisions and thousands of local operations use separate information systems, managers unable to access timely data

• Solution: SAP’s Business Suite Applications to replace all legacy software around the world, rolling out the enterprise software in phased and modular stages

• Demonstrates: The need for global firms to have international systems for monitoring the business

• Illustrates: The use of enterprise software suite to minimize integration problems

3M: Sticky Film And Scratchy Things That Sell Around The World



Author, 01/14/2011

new


• Global economic system and global world order driven by advanced networks and information systems

• Growth of international trade has radically altered domestic economies around the globe

• For example, production of many high-end electronic products parceled out to multiple countries• E.g., Hewlett-Packard laptop computer

The Growth of International Information Systems





AN HP LAPTOP’S PATH TO MARKET

HP and other electronics companies assign distribution and production of their products to a number of different countries.

FIGURE 15-1




• Strategy when building international systems1. Understand global environment• Business drivers pushing your industry toward global competition• Inhibitors creating management challenges

1. Develop corporate strategy for competition• How firm should respond to global competition

1. Develop organization structure and division of labor• Where will production, marketing, sales, etc., be located

1. Consider management issues• Design of business procedures, reengineering, managing change

1. Consider technology platform






INTERNATIONAL INFORMATION SYSTEMS ARCHITECTURE

The major dimensions for developing an international information systems architecture are the global environment, the corporate global strategies, the structure of the organization, the management and business processes, and the technology platform.

FIGURE 15-2




• Global business drivers:• General cultural factors lead toward internationalization

and result in specific business globalization factors




GENERAL CULTURAL FACTORS SPECIFIC BUSINESS FACTORS

Global communication and transportation technologiesDevelopment of global cultureEmergence of global social normsPolitical stabilityGlobal knowledge base

Global marketsGlobal production and operationsGlobal coordinationGlobal workforceGlobal economies of scale


• Challenges and obstacles to global business systems• General cultural challenges

• Cultural particularism• Regionalism, nationalism, language differences

• Social expectations:• Brand-name expectations, work hours

• Political laws• Transborder data flow• Transborder data and privacy laws, commercial regulations





• Challenges to global business systems (cont.)• Specific challenges

• Standards• Different EDI, e-mail, telecommunication standards

• Reliability• Phone networks not uniformly reliable

• Speed• Different data transfer speeds, many slower than U.S.

• Personnel• Shortages of skilled consultants





• State of the art• Most companies have inherited patchwork

international systems using 1960s-era batch-oriented reporting, manual entry of data from one legacy system to another, and little online control and communication

• Significant difficulties in building appropriate international architectures• Planning a system appropriate to firm’s global strategy• Structuring organization of systems and business units• Solving implementation issues• Choosing right technical platform





• Global strategies and business organization• Three main kinds of organizational structure

• Centralized: In the home country• Decentralized/dispersed: To local foreign units• Coordinated: All units participate as equals

• Four main global strategies• Domestic exporter• Multinational• Franchisers• Transnational

Organizing International Information Systems




GLOBAL BUSINESS AND STRATEGY




BUSINESS FUNCTION

DOMESTIC EXPORTER

MULTINATIONAL FRANCHISER TRANSNATIONAL

Production Centralized Dispersed Coordinated Coordinated

Finance/Accounting

Centralized Centralized Centralized Coordinated

Sales/Marketing

Mixed Dispersed Coordinated Coordinated

Human Resources

Centralized Centralized Coordinated Coordinated

Strategic Management

Centralized Centralized Centralized Coordinated


• Global systems to fit the strategy• Configuration, management, and development of systems

tend to follow global strategy chosen• Four main types of systems configuration

1. Centralized: Systems development and operation occur totally at domestic home base

2. Duplicated: Development occurs at home base but operations are handed over to autonomous units in foreign locations

3. Decentralized: Each foreign unit designs own solutions and systems

4. Networked: Development and operations occur in coordinated fashion across all units






GLOBAL STRATEGY AND SYSTEMS CONFIGURATIONS

The large Xs show the dominant patterns, and the small Xs show the emerging patterns. For instance, domestic exporters rely predominantly on centralized systems, but there is continual pressure and some development of decentralized systems in local marketing regions.

FIGURE 15-3




• To develop a global company and information systems support structure:1. Organize value-adding activities along lines of

comparative advantage• E.g., Locate functions where they can best be performed, for least

cost and maximum impact

1. Develop and operate systems units at each level of corporate activity—regional, national, and international

2. Establish at world headquarters:• Single office responsible for development of international systems• Global CIO position





• Principle management challenges in developing global systems

• Agreeing on common user requirements

• Introducing changes in business processes

• Coordinating application development

• Coordinating software releases

• Encouraging local users to support global systems

Managing Global Systems




• Typical scenario: Disorganization on a global scale• Traditional multinational consumer-goods company based

in U.S. and operating in Europe would like to expand into Asian markets• World headquarters and strategic management in U.S.

• Only centrally coordinated system is financial controls and reporting

• Separate regional, national production and marketing centers• Foreign divisions have separate IT systems• E-mail systems are incompatible• Each production facility uses different ERP system, different

hardware and database platforms, etc.





• Global systems strategy• Share only core systems• Core systems support functionality critical to firm

• Partially coordinate systems that share some key elements• Do not have to be totally common across national

boundaries• Local variation desirable

• Peripheral systems• Need to suit local requirements only






LOCAL, REGIONAL, AND GLOBAL SYSTEMS

Agency and other coordination costs increase as the firm moves from local option systems toward regional and global systems. However, transaction costs of participating in global markets probably decrease as firms develop global systems. A sensible strategy is to reduce agency costs by developing only a few core global systems that are vital for global operations, leaving other systems in the hands of regional and local units.

FIGURE 15-4




1. Define core business processes

2. Identify core systems to coordinate centrally

3. Choose an approach• Piecemeal and grand design approaches tend to fail• Evolve transnational applications incrementally from existing

applications

1. Make benefits clear• Global flexibility• Gains in efficiency• Global markets and larger customer base unleash new economies of

scale at production facilities• Optimizing corporate funds over much larger capital base





• The management solution: Implementation• Agreeing on common user requirements• Short list of core business processes• Develop common language, understanding of common

elements and unique local qualities• Introducing changes in business processes• Success depends on legitimacy, authority, ability to

involve users in change design process• Coordinating applications development• Coordinate change through incremental steps• Reduce set of transnational systems to bare minimum





Read the Interactive Session and discuss the following questions

• Describe the various capabilities of SAP GTS. How does using this software help Fonterra manage its export trade? What quantifiable benefits does this system provide?

• How would you characterize Fonterra’s global business strategy and structure (review Table 15-3)? What kind of a global business is it? Has Fonterra’s structure and strategy shaped its uses of SAP GTS? Would a transnational company choose a different solution?

• What influence does the global business environment have on firms like Fonterra, and how does that influence their choice of systems?


FONTERRA: MANAGING THE WORLD’S MILK TRADE




• The management solution (cont.)• Coordinating software releases• Institute procedures to ensure all operating units update

at the same time• Encouraging local users to support global systems• Cooptation: Bringing the opposition into design and

implementation process without giving up control over direction and nature of the change• Permit each country unit to develop one transnational

application

• Develop new transnational centers of excellence





• Technology challenges of global systems• Computing platforms and systems integration• How new core systems will fit in with existing suite of

applications developed around globe by different divisions • Standardization: Data standards, interfaces, software, etc.

• Connectivity• Internet does not guarantee any level of service• Many firms use private networks and VPNs• Low penetration of PCs, outdated infrastructures in

developing countries

Technology Issues and Opportunities for Global Value Chains





INTERNET PENETRATION BY REGION

The percentage of the total population using the Internet in developing countries is much smaller than in the United States and Europe, but the fastest growth is in Asia.

FIGURE 15-5




• Technology challenges of global systems (cont.)• Software• Integrating new systems with old• Human interface design issues, languages• Software localization: converting software to operate in

second language• Most important software applications:• TPS and MIS

• Increasingly, SCM and enterprise systems to standardize business processes

• Applications that enhance productivity of international teams





Read the Interactive Session and discuss the following questions

• What strategies are cell phone companies using to ‘close the digital divide’ and market phones to the poorest segment of the world’s population?

• Why do economists predict that widespread cell phone usage in developing countries would have an unprecedented effect on the growth of those countries?

• What are some examples of how cell phones might increase quality of life for residents of developing countries?

• Do you believe that cell phones will proliferate widely through Africa and Asia? Why or why not?


HOW CELL PHONES SUPPORT ECONOMIC DEVELOPMENT



chapter 11 mis

Education

global information systems

separate information

global systems prentice

global firms

global businesses

global competition1

corporate global strategies

global world order